JPMorgan Chase is now part owner of Remington Outdoor after a national debate over gun rights has led other companies to reconsider their relationships with the firearms industry.
JPMorgan Asset Management, which handles client funds, was one of Remington's biggest lenders before its bankruptcy and bought the debt without knowing it would one day end up owning the company, one of America’s largest and most historic gun-makers. During the bankruptcy, JPMorgan supplied, along with Franklin Templeton, the $100 million loan to carry it through and out of the Chapter 11 process.
The firearms sector has come under increased scrutiny since a mass shooting in Parkland, Florida, left 17 dead and sparked nationwide protests calling for gun control. There were renewed calls for gun control following a mass shooting at a Texas high school on May 18.
Boycotts following the Florida shooting led a variety of companies to cut ties with the National Rifle Association. Dick's Sporting Goods and Walmart announced restrictions on gun sales in their stores. Even link-sharing site Reddit waded into the debate, removing several popular firearms-related communities from the platform.
Shareholders voted that Sturm, Ruger, which manufactures firearms, prepare a report on risks related to the company’s business. Institutional investors such as BlackRock were pressured to engage with the publicly traded gun makers they invest in.
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The money manager is also offering pension and 401(k) plans that exclude firearms from employee retirement programs.
April 5 -
Some investors are demanding action on gun manufacturer and retailer stocks. Can financial advisors deliver?
March 23 -
Engagement with companies beyond the firearms industry is a better solution, Calvert Research says.
March 13
Not all corporations were successfully wooed by gun control advocates: Wells Fargo, which provides financial services to the NRA, did not make any changes to its firearms lending policy; nor did it cut ties with the gun rights group.
Citigroup and Bank of America changed their firearms industry lending policies following the Florida attack. JPMorgan did not make any public announcements related to its firearms policy.
While outpacing the S&P 500, the price tag is higher — the average expense ratio is more than 1%.
Now out of bankruptcy, Remington is owned by its former lenders. Certain stakeholders started putting out feelers for a potential strategic buyer in April, people with knowledge of the matter told Bloomberg News at the time.
Bankruptcy loans are typically highly profitable for lenders, but the fees JPMorgan collected for the financing were redacted from court documents. In earlier court filings, Remington said it had struggled to find lenders, since most potential investors “were reluctant to provide financing to firearms manufacturers.”
Remington converted more than $775 million in debt into equity as part of its reorganization. Under the ownership of Cerberus Capital Management, the company had been saddled with nearly $1 billion in debt. Remington is made up of 13 brands, which manufacture guns, firearms accessories and ammunition.
JPMorgan declined to comment for this story.
